Shares in HBOS, Britain's biggest mortgage lender, fell as much as 60% on the London Stock Exchange yesterday as financial shares fell sharply in the wake of the Lehman Brothers bankruptcy and amid fears of further market turmoil. The shares later rebounded but still lost over a third of their value.
HBOS, parent company of Halifax and the Bank of Scotland and owner of BankWest, has come under pressure because of its exposure to the US subprime mortgage market, raising questions about whether it can refinance its debt of more than 100 million pounds ($225 million) in coming months.
The company said it was able to raise money.
A spokesman for HBOS, speaking on condition of anonymity, said the the company was "very confident'' of its position.
"The credit crunch has been going on for over a year, and during that period we have demonstrated the sheer resilience of our funding franchise,'' he said. "We continue to access the wholesale markets whenever we choose to do so.''
Shares fell as low as 138.25 pence in afternoon trading, down from yesterday's close of 232.5 pence.
Later the shares were trading around 150 pence, or about 35% down.
"The fact that HBOS has been sold off suggests people are worried about the funding,'' said Bruce Packard, broker at Pali International. "But this is quite hard to quantify - it's looking like banks are all being marked down as a whole.''
Royal Bank of Scotland dropped 12.6% and Barclays was off 7.6% in a falling market in London.
Banking analyst Alex Potter at Collins Stewart said HBOS appeared to have no problems with liquidity in the first quarter of the year.
AP
